The basic idea of VoIP is outlined in its acronym: voice over internet protocol. It’s a technology that uses the transfer of data over the internet to replace the more traditional option of connecting to a public switch telephone network (PSTN).

The most appealing thing about it, especially as far as small business is concerned, is the cost that it saves. In comparison to PSTN services, call charges are negligible, and a single ADSL2+ internet connection can theoretically replace a whole office’s worth of phone lines.

Traditionally, businesses not willing to sacrifice call quality for reduced costs have been sceptical of VoIP and its reliance on the consistency of a public internet connection. But with the increasingly high standard of ADSL services in Australia, and with the possibilities of the NBN just around the corner, many are throwing caution to the wind and replacing traditional phone systems with VoIP.

The key to making this transition successfully lies in the type of service you choose, and the size of the provider offering it. Are you better off with a small business digital voice specialist or a large telco?

Private line

Just as with a mobile network, internet services occasionally suffer from congestion, which results in a slower and less reliable transferral of data. While this kind of interference results in slower loading times when it comes to browsing, it can severely affect the sound quality and reliability of each call’s connection for those using VoIP phones.

The most effective way of getting around the quality issues associated with using VoIP over a standard internet connection is to bypass the public infrastructure altogether. The alternative is to set up a private line that connects the office’s VoIP-specific internet connection directly to the copper exchange. Allan Dib, co-founder and CEO of VoIP specialist Voxcom, calls this approach VoPIP, or voice over private internet protocol.

“We bring in a copper pair from the exchange, and that terminates directly within our network,” he says. “It runs at about half the cost of a normal phone line and you don’t have to experience all of the downsides of a public VoIP service.”

One benefit of opting to use private VoIP is that it gives the business more flexibility and control over how internal phone systems are managed. Given that all the hardware needed for it to operate is owned and housed by the business, those with VoPIP can more easily change providers if they want to, and can customise their digital phone networks to integrate with internal applications as needed.

Rene Sugo, technical director at MyNetFone, warns that having self-tended in-house digital voice hardware comes at the cost of having to maintain it.

“Traditionally, people used to put a box on the wall, and every time you wanted to make a change, you needed to get a person who knew how to program the box to come out with a screwdriver,” he says. “There’d be a service call. You’d have to wait for that person to be available, which might take a few days. If that box were to fail, you’d need to buy a new box or get it fixed under warranty.”

While the call and line rental savings associated with VoPIP may be appealing, small businesses that can’t afford to have full-time IT departments or ongoing maintenance costs will need a cheaper, simpler option that’s no less reliable to make the switch to VoIP worthwhile.

Virtual exchange

Cloud PBX, also known as virtual or hosted PBX, is arguably the purest form of VoIP, as it it removes the need for any physical infrastructure to be installed in-office. Instead, everything from the phone exchange system to functions like call waiting and voicemail are run as software hosted in remote servers. All maintenance and support is handled by the service provider. All that’s needed for a business to use cloud PBX is a VoIP handset and an internet connection.

“Cloud PBX means the customer doesn’t have to own a phone system, so they rent a software as a service, similar to cloud hosting,” says Alan Dib.

The major advantage of cloud PBX is that you don’t have to maintain the hardware that your VoIP phones run on, which is a major benefit for small startups running on a limited budget. If a piece of private line VoIP hardware fails, it has to be replaced at considerable cost to the business owner. The only hardware that a business using virtual PBX will ever need to replace is its handsets.

There are a number of inevitable downsides to using a hosted PBX voice service. Unlike private VoIP, it’s nowhere near as customisable. If a service provider’s product doesn’t already integrate with the software your business is using, it’s unlikely to evolve to accommodate your needs. The most pressing drawback, however, is that using cloud PBX still means your entire business’s phone system will rely on the consistency of a public internet connection.

While cloud PBX providers usually offer counter measures – such as diverting lost calls to mobiles or providing voicemail to email services – businesses considering this option will ultimately have to choose how much they’re willing to compromise for the reduced cost.

“About 70% of our customers run their VoIP system on their own internet connection from a regular provider, and about 30% choose to buy an additional internet line from us,” says MyNetFone’s Sugo. “Generally, we see that transition around about the 12–20 handsets mark. Most people that run four handsets or eight handsets don’t need much bandwidth. They can happily run that on an ADSL2+ connection from a regular provider.”

Major league

While smaller service providers like Voxcom and MyNetFone typically offer a choice of cloud PBX or VoPIP, larger telco’s have traditionally relied on selling digital voice products based on their pre-existing public IP infrastructure.

“Optus and Telstra want to sell you their legacy products; they don’t want to sell you VoIP,” says Voxcom’s Dib. “The Optus products, for example, again use totally public IP infrastructure. We’ve won many customers from Optus who’ve had a terrible VoIP service experience with them, and that’s because they run it over the public internet.”

To counter this kind of defection, Telstra has recently launched a digital voice product targeted at small businesses. It still uses the public infrastructure, but prioritises VoIP traffic over all other types of data that pass through its exchanges, as a measure to improve call quality.

“We deployed a technology called ‘quality of service’ in our ADSL exchanges around the country. That insures that our voice traffic will be prioritised over the ADSL2+ network,” says Tas Tzoulis, general manager of product marketing for digital business at Telstra.

“They use a particular codec that, for a voice packet, that identifies that piece of traffic and pumps it up to the top of the priorities. All the rest of the traffic is not coded to jump up to the top of the queue.”

MyNetFone’s Sugo concedes that the tactic of prioritising data is effective for businesses running a small number of handsets, but warns that it’s not a solution that will grow with the business.

“Once you start getting to a large number of handsets, you might get a situation where you need all the bandwidth for your VoIP, and then it leaves nothing behind for the internet. Then, you might see the internet start to slow down,” he says. “It’s really a scalability question, and that’s because ADSL2+ is generally limited with the uplink speed of about 500–800kbps. As we move into the NBN world, where uplink speeds are going to be 1MB and above, you’ll probably see that threshold move. You’ll probably be able to run 40 handsets quite happily on a regular NBN connection.”

Although prioritised traffic may improve the consistency of digital voice products, at the end of the day, if a VoIP service operates over a public internet exchange, it’s vulnerable to reduced call quality. Once the NBN has been rolled out across Australia, a simple internet connection and virtual PBX phone system will suffice for most Australian small businesses. Until then, small businesses switching to VoIP will have to choose between the potential maintenance costs of a private line, and allowing their phone system to rely on the vagaries of a public internet connection.

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